• Revenue: $181 million for the quarter, down 7% sequentially.
• Power Device Revenue: $91 million, down 6% sequentially.
• Materials Revenue: $90 million, down 8% sequentially.
• Mohawk Valley Revenue: $52 million, expected to grow to $55 million-$75 million in Q3.
• Non-GAAP Gross Margin: 1.8%, down 160 basis points quarter-over-quarter.
• Operating Expenses: $108 million, down $11 million quarter-over-quarter.
• Adjusted EPS: Negative $0.95.
• Cash and Liquidity: Approximately $1.4 billion at quarter-end.
• Free Cash Flow: Negative $598 million.
• Capital Expenditures: $403 million for the quarter.
• Q3 2025 Revenue Guidance: $170 million to $200 million.
• Q3 2025 Non-GAAP Gross Margin Guidance: Minus 3% to 7%.
• Q3 2025 Non-GAAP EPS Loss Guidance: $0.88 to $0.76.

• Warning! GuruFocus has detected 9 Warning Signs with WOLF.

Release Date: January 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Wolfspeed Inc (NYSE:WOLF) is making significant progress in ramping up its Mohawk Valley facility, with revenue from this site expected to grow in the coming quarters.
• The company has successfully reduced operating expenses by $23 million or 21% in the first half of fiscal 2025, demonstrating effective cost management.
• Wolfspeed Inc (NYSE:WOLF) has secured a $2.5 billion funding package, including a $750 million grant and $750 million in private secured term loan financing, providing a strong liquidity position.
• The company is the first to begin commercial production on 200-millimeter substrates, which is a key competitive advantage in the silicon carbide market.
• Wolfspeed Inc (NYSE:WOLF) has achieved significant year-over-year growth in its EV revenue, with a 92% increase, indicating strong demand in the automotive sector.

Negative Points

• The company reported a non-GAAP gross margin of only 1.8%, which is down 160 basis points quarter-over-quarter, indicating margin pressure.
• Wolfspeed Inc (NYSE:WOLF) is facing ongoing weakness in the industrial and energy end markets, impacting its power device revenue.
• The company experienced a negative free cash flow of $598 million during the quarter, highlighting cash flow challenges.
• There are concerns about the competitive landscape, particularly with developments in China regarding 200-millimeter silicon carbide wafer capacity.
• Wolfspeed Inc (NYSE:WOLF) is undergoing significant restructuring efforts, including the closure of facilities, which may lead to operational disruptions.

Q & A Highlights

Q: Can you provide insights into the current demand environment, particularly regarding EV demand and the ramp-up at Mohawk Valley? A: Thomas Werner, Independent Chairman of the Board, explained that while EV growth is slowing, it is still growing. Specific OEMs and models are ramping at different rates, with some ahead of forecasts. Neill Reynolds, CFO, added that EV revenue grew 92% year-over-year and is expected to continue growing, driven by a broad customer base and diverse models.

Q: How is Wolfspeed addressing the competitive landscape, especially concerning 200-millimeter SiC wafer capacity in China? A: Thomas Werner stated that Wolfspeed is the only volume producer of 200-millimeter wafers, shipping thousands weekly to Mohawk Valley. The company is sampling customers and engaging with volume and LTA partners, maintaining a technological lead.

Q: What is the status of Wolfspeed's CHIPS Act funding and its importance to liquidity? A: Thomas Werner mentioned constructive engagement with the CHIPS program office, emphasizing Wolfspeed's alignment with American technology and manufacturing goals. Neill Reynolds highlighted visibility to $325 million in liquidity from tax credits and asset sales, with additional funding from the CHIPS grant and term loan financing.

Q: Can you elaborate on Wolfspeed's revenue breakeven point and its feasibility in the current environment? A: Thomas Werner noted that the cost reduction program aims to lower the breakeven point to under $1 billion. Neill Reynolds added that operational initiatives and revenue growth in power devices will help achieve this, despite limited visibility in industrial and energy markets.

Q: How has Wolfspeed's financial situation impacted customer interest and design-wins? A: Thomas Werner reported $1.475 billion in design-ins and $795 million in design-wins for the quarter, with cumulative design-wins at $12.2 billion. The company maintains transparency and alignment with key customers, focusing on increasing supply and leveraging existing capital commitments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.